PayPal to Stop Protecting Crowdfunding Projects

09 May 2016, USA :
PayPal has updated its User Agreement, making some changes to what it offers Purchase Protection on. Specifically, it will no longer protect those who back projects that later go bust.

The policy change kicks in from June 25th, so you’ll have to adapt a buyer beware attitude when it comes to crowdfunding. From this date, you won’t be able to dispute the charge to get your money back if the project goes bust or if it doesn’t deliver what was promised.

The list of items not eligible for Purchase Protection also includes anything purchased from or an amount paid to a government agency, and gambling, gaming and/or any other activity with an entry fee and a prize.

PayPal says that the policy change reflects “the risks and uncertainties involved in contributing to crowdfunding campaigns.” It adds that these “do not guarantee a return for the investment made in these types of campaigns.”

It further explained that while your payment is not eligible for PayPal Purchase Protection, you can still file a dispute to try to resolve the issue directly with the seller. However it added there are some caveats. “PayPal will generally not find in your favor if you escalate a dispute to a claim for an item which is not eligible for PayPal Purchase Protection,” the statement read.

“In Australia, Brazil, Canada, Japan, United States and other countries, we have excluded payments made to crowdfunding campaigns from our buyer protection programs. This is consistent with the risks and uncertainties involved in contributing to crowdfunding campaigns, which do not guarantee a return for the investment made in these types of campaigns.”

While we await more details on how this is going to impact crowdfunding platforms, a spokesperson from PayPal told that the policy changes will not be applied to customers in the U.K. and the company has no plans in the near future to make changes to that decision. PayPal has also dropped purchase protection on anything bought from or paid to a government agency as well as gambling and any activity with an entry fee and a prize.

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